Know Your Role
Speaking with conviction is useful. Speaking with accuracy is imperative.
The Massachusetts State House hearings regarding auto insurance reform reached a new low this week, when a legislative committee that has no authority over the issue conducted a rambling, nearly six-hour-long affair that seem designed only to trap Insurance Commissioner Nonnie Burnes into admitting her auto insurance reform efforts will hurt consumers.
The result was disheartening for anyone who clings to the notion that elected officials are always rational, capable and coherent. Rather, the event left only the impression that auto insurance reform should quite rightly be kept out of the hands of legislators.
However, the Division of Insurance isn’t blameless in the incident. While it’s understandable that deference to the Legislature should be a concern, there is no reason for Burnes to spend any more time engaging in such farces, especially when it would appear that more time needs to be spent crafting the reform and evaluating the reasoning for changes.
During this most recent hearing, the commissioner commented that an assigned risk plan could improve the level of service offered to drivers in the residual market. The notion, Burnes reported, is that drivers currently ceded to Commonwealth Automobile Reinsurers (CAR) could be subject to shoddier service than drivers that are not ceded.
I accept there may be more things in heaven and earth than are dreamt of in my philosophy, to paraphrase Mr. Shakespeare. This situation, however, is somewhat different than, “Look, Horatio, there might be ghosts.” There’s essentially no situation in which this characterization of the residual market might be accurate. Insurers cede drivers as a financial arrangement that drivers are entirely unaware of – and have no reason not to treat their customers equally.
Independent agents, through which most drivers in the Bay State access their insurers, don’t always know which policies have been ceded. It’s a behind-the-scene decision, not one based connection to drivers or evident through customer service. The push for an assigned risk plan highlighted the fact that assigning individual drivers and making insurers responsible for their losses would encourage companies to fight fraud more effectively and take a role in turning around the records of bad drivers. It has not been suggested that ceded drivers are treated with less care and that an assigned risk plan would do anything to cure the problem.
Last week, in this space, I advocated forthright stances from insurance regulators. This week, I would suggest that there’s only one surefire way to avoid criticism. Be right. Don’t invite opponents to pick apart supporting arguments. As for lawmakers, know your role. Submit questions to the appropriate parties and publicize the answers. File a bill if necessary. Seeking information is fine and advisable. Claims of “transparency” don’t excuse hours of circular questioning.